Correlation Between Kiatnakin Phatra and AJ Plast

Can any of the company-specific risk be diversified away by investing in both Kiatnakin Phatra and AJ Plast at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Kiatnakin Phatra and AJ Plast into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Kiatnakin Phatra Bank and AJ Plast Public, you can compare the effects of market volatilities on Kiatnakin Phatra and AJ Plast and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Kiatnakin Phatra with a short position of AJ Plast. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kiatnakin Phatra and AJ Plast.

Diversification Opportunities for Kiatnakin Phatra and AJ Plast

0.08

Correlation Coefficient

Kiatnakin Phatra  AJ Plast

Significant diversification

The 3 months correlation between Kiatnakin and AJ Plast is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Kiatnakin Phatra Bank and AJ Plast Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AJ Plast Public and Kiatnakin Phatra is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Kiatnakin Phatra Bank are associated (or correlated) with AJ Plast. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AJ Plast Public has no effect on the direction of Kiatnakin Phatra i.e., Kiatnakin Phatra and AJ Plast go up and down completely randomly.

Pair Corralation between Kiatnakin Phatra and AJ Plast

Assuming the 90 days trading horizon Kiatnakin Phatra is expected to generate 64.64 times less return on investment than AJ Plast. But when comparing it to its historical volatility, Kiatnakin Phatra Bank is 70.45 times less risky than AJ Plast. It trades about 0.12 of its potential returns per unit of risk. AJ Plast Public is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  535.00  in AJ Plast Public on September 2, 2024 and sell it today you would lose (55.00) from holding AJ Plast Public or give up 10.28% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Kiatnakin Phatra Bank  vs.  AJ Plast Public

Kiatnakin Phatra Bank

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kiatnakin Phatra Bank are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Kiatnakin Phatra disclosed solid returns over the last few months and may actually be approaching a breakup point.

AJ Plast Public

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AJ Plast Public are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting fundamental drivers, AJ Plast disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kiatnakin Phatra and AJ Plast

The main advantage of trading using opposite Kiatnakin Phatra and AJ Plast positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kiatnakin Phatra position performs unexpectedly, AJ Plast can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in AJ Plast will offset losses from the drop in AJ Plast's long position.

The idea behind Kiatnakin Phatra Bank and AJ Plast Public pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Stocks Directory module to find actively traded stocks across global markets.